The financial authorities in the Netherlands plan a licensing scheme for cryptocurrency exchanges, as well as wallet service providers in order to prevent money laundering and terrorism financing.
The risks need to be addressed effectively
DNB or De Nederlandsche Bank, which is the central bank of the nation, and the Netherlands Authority for the Financial Markets have published a report earlier in this week, in which they suggested that fiat-to-crypto exchanges and custody solution providers have to be licensed as cryptos carry high financial crime risks.
The report stated that these risks have to be addressed adequately, which may be accomplished as a sequence of the worldwide coordination of countermeasures which AMLD5, the Fifth European Anti-Money Laundering Directive provides.
Both of the authorities stated that they are recommending the licensing regime instead of a registration system as it permits pre-market entry assessment to know if involved parties are going to comply or have the ability to comply with the AMLD5 rules.
On the other hand, a registration regime is going to be less effective because it just permits for a limited substantive assessment of these parties.
Bring new forms of corporate funding
Secondly, the authorities also recommended that the European regulatory framework for corporate financing has to be amended to enable blockchain-based development of some small-and-medium-sized enterprises or SMEs and to enable the use of crypto assets such as shares or bonds.
In accordance to this, the authorities also recommended reconciling the federal definition of a security with a broader meaning in European legislation in order to bring some new forms of corporate funding like Initial Coin Offerings or ICOs and security token offering or STOs under the scope of applicable rules.
The paper added that amending the outline is also desirable in anticipation of some potential European consensus about the qualification of several cryptocurrencies as security under present legislation.
Putting international crypto rules
Finally, the regulators called for some international crypto rules to be put in place because the Dutch-based providers of the cryptocurrency services number less than 30 and their volumes are also negligible, in comparison to large-scale players globally.
The report stated that the development of cryptocurrencies is firstly international-oriented, given their fundamental cross-border nature, and cannot be confined to the Dutch market only.
Earlier in January, two of the primary regulators in Europe, the European Banking Authority or EBA and the European Securities and Markets Authority or ESMA, also separately called for crypto and ICO rules at the EU level.